FINANCIAL STRATEGIES

Financial strategies employed by companies to enhance firm performance and maximize shareholders wealth

Financial strategies employed by companies to enhance firm performance and maximize shareholders wealth

Introduction

Often organizations follow financial strategies when the management believes that the past decisions have been right and changes are required in target markets or organization's products. The financial strategies do not always mean that the organization will do nothing, but rather that the management believes that the organization is progressing appropriately (Blair, 1991, 66).

Discussion and Analysis

Financial market is the place where companies join the market to get a portion of their funds and assess their financial situation. Any company with market access in financial and stock market can present your financial situation public in annual reports.

But in any situation, the company cannot be indifferent to the functioning of financial markets and the conditions of their own actions. The most important issue for all managers is communication with the financial market. The staff of the company must continuously inform the financial world through annual meetings to present the results, announced by the publication of the essential facts of economic life, etc., so that their identity and visibility should be evaluated in the capital market, or the adoption of a financial offensive or defensive financial strategy (Clements, 1999, 12).

In the financial market, the company can adopt an active financial strategy, not only to conduct financial transactions, but also to ensure its external growth through absorption operations, merger, joint and control. The title of the company thus becomes an article of commerce, a policy instrument to third parties, market. The operation is more favourable if the rate is higher title.

However, the financial performance of this strategy involves offensive achievement of certain financial results in growth, recognized by the market and with an acceptable risk rate (Ehrhardt, 1994, 14).

A defensive financial strategy means a company attitude that has relations with the market in order to permanently apply the issues obligations, in certain circumstances, to make a capital increase. In this case, the market plays the role of funding "generator" the company is not acting to change, but only to defend its independence and control.

Selection of expansion or financial strategies dictates that the next decision to make your concerns in the market. (If you decline an outreach strategy is selected, there is no reason to enter the market.) Outreach strategies increasingly specify the entry or access to new markets, and maintenance strategies often require the development of new resources (Clements, 1999, 19).

An organization can use its financial resources and buying in the market, together with other organizations and using cooperation to enter a market, or use its own resources and develop their own products and services. It is important to understand that strategies for market entry are not ends in themselves but serve a larger goal of strategies, the scope. Any outreach strategies can be accomplished by any of the strategies for market entry, but each places different demands of the organization (Ehrhardt, 1994, ...